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Nov. 9, 2023 Source: Bayer news release Leverkusen - Bayer has confirmed its Group outlook for 2023 after posting third-quarter figures that were down against the previous year. "The results came in largely as we expected, knowing that Q3 is never our strongest quarter. The important message is that, based on where we are and what we see for the remaining quarter, we are confirming the updated 2023 guidance," CEO Bill Anderson said on Wednesday when presenting the company's Quarterly Statement. "We know that this requires a strong fourth quarter. We're fully focused on delivering exactly that - and the team is confident in our outlook." "We're not happy with this year's performance. Nearly 50 billion euros in revenue but zero cash flow is simply not acceptable," stated Anderson, who has been at the helm of the company since June. He intends to focus everything on Bayer's mission of "Health for all, hunger for none," and on driving innovation and strengthening financial performance. "Our mission hasn't always been front and center in our operations. That will change. We are redesigning Bayer to focus only on what's essential for our mission - and getting rid of everything else." By the end of next year, Bayer will remove multiple layers of management and coordination, he said. "This step will unleash our teams with the mission-focus necessary to turn things around. 95 percent of the decision-making in the organization will shift from managers to the people doing the work." Even though this will include a significant reduction in the workforce, it is not a traditional cost-cutting program, Anderson said. In addition, a new Board of Management compensation system will be proposed at the next Annual Stockholders' Meeting, he said, noting that it will be more closely aligned with the long-term development of the company's share price. "We are looking closely at our structural options. We have an expert team - including external financial advisors - evaluating them. They're reviewing market conditions, what structural changes would mean for our value creation, one-time costs and dis-synergies, cash flows and leverage ratios, tax leakage, and other criteria," Anderson explained. In terms of structural options, beyond maintaining three divisions, a separation of either Consumer Health or Crop Science remains under evaluation. "We have also taken some options out of consideration. For example, we considered simultaneously splitting the company into three businesses. We're ruling that option out. A three-way split would require a two-step process." The company will share further details in March at its Capital Markets Day together with the publication of the Annual Report and the 2024 guidance. Based on current market dynamics and first assumptions, Bayer expects a soft growth outlook and continued challenges to the company's profitability for next year. Crop Science sales at prior-year level (Fx & portfolio adj.) thanks to higher volumes Sales in the agricultural business (Crop Science) were level year on year at 4.365 billion euros (Fx & portfolio adj. plus 0.6 percent). Higher volumes in all regions were mostly offset by lower prices for glyphosate-based products following an exceptionally strong prior year. Sales at Corn Seed & Traits rose by 21.2 percent (Fx & portfolio adj.) thanks to price increases in all regions. Business at Fungicides was up 16.2 percent (Fx & portfolio adj.), mainly due to higher volumes in Latin America. The Soybean Seed & Traits business likewise posted double-digit percentage growth of 15.6 percent (Fx & portfolio adj.), primarily driven by higher license revenues in Latin America. By contrast, sales at Herbicides were down by 17.3 percent (Fx & portfolio adj.), with substantial price declines outweighing higher volumes in all regions. EBITDA before special items at Crop Science declined to minus 24 million euros (Q3 2022: plus 629 million euros), mostly due to lower prices for glyphosate-based products. Earnings were also diminished by a mainly inflation-related increase in the cost of goods sold. By contrast, there was a positive currency effect of 121 million euros (Q3 2022: negative currency effect of 93 million euros). The EBITDA margin before special items declined by 13.9 percentage points to minus 0.5 percent. To read the entire report click here. Tweet |
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